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Study Group for Encouraging Dialogue between Biotech Venture Businesses and Investors to be Established

Aiming to enhance the competitiveness of the drug development industry, the Ministry of Economy, Trade and Industry (METI) will hold discussions on measures for improving environments in which bio-venture businesses are smoothly able to raise funds. Specifically, METI will establish a Study Group for Encouraging Dialogues between Biotech Venture Businesses and Investors to encourage successfully-listed biotech venture businesses and institutional investors to create dialogues and to minimize obstacles to developing environments in which biotech venture businesses are able to raise funds more smoothly in Japan.

1. Background

Over 60% of all new medical products on the market worldwide are developed by biotech venture businesses. As the drug development industry is expected to accelerate the development of groundbreaking medical products for specific groups of patients and to advance the development of new medical technologies, e.g., regenerative medical care, the role played by biotech venture businesses is estimated to become larger for their efficient investment in R&D efforts by targeting markets with appropriate scales.

Meanwhile, many biotech venture businesses continue to face severe difficulties in debt management even after having been listed on the Mothers and the JASDAQ in Japan. Placing a new medical product on the market is the only way to succeed in this business. To address this situation, it is important for Japan to improve the environment in which listed biotech venture businesses raise funds.

Looking at a comparison between Japan and the United States concerning the number of shareholders of listed biotech venture businesses to all shareholders, the difference is considerable: individual investors account for the majority of these shareholders in Japan, while institutional investors account for the majority in the U.S. The market value of bio-venture businesses listed on the Mothers and the JASDAQ in Japan remains approximately 1 trillion yen; smaller than the figures not only in Western countries but also in other Asian countries.

New development of business environments in which such businesses are able to create groundbreaking medical products in Japan requires the development of environments in which such venture businesses are able to more smoothly raise funds from investors from both inside and outside Japan.

2. Purpose

Recognizing this situation and challenge, the Investments for the Future Strategy 2017, policy approved by the Cabinet on June 9, 2017, set a goal: [t]he government will also study measures to develop business environments, including (...) the facilitation of supply of research and development funds, etc. through the promotion of the creation of funds to be invested in the bio industry after listing of shares by the end of this fiscal year.

Accordingly, METI decided to establish a Study Group for Encouraging Dialogues between Biotech Venture Businesses and Investors. The study group will formulate (referencing the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (released by METI on May 29, 2017)) a document(with the tentative title of Guidance for Investment in Biotech venture Businesses) to encourage dialogues between domestic and overseas investors and domestic venture businesses; will streamline processes and reduce or minimize obstacles that bio-venture businesses listed on the Mothers and the JASDAQ in Japan may face in fundraising; and will hold discussions concerning approaches to policy measures necessary for developing an environment in which such businesses are able to raise funds more smoothly.

3. Subjects to be discussed

  • Current situation that biotech venture businesses are facing in fundraising and challenges therein
  • Ideal approaches to classifying the business models of such businesses and to improving their corporate value
  • Appropriate steps that investors should take in evaluating such businesses
  • Approaches to making support measures and stock management methods used by institutional investors consistent for these businesses
  • Methods of information disclosure taken by such businesses and achievement indices that institutional investors expect
  • Challenges in listed markets and growth bottlenecks that such businesses may face
  • Ideal approaches to formulating a guidance for dialogues, future directions of policy measures, and other issues, taki

4. Schedule

The study group will hold its first meeting on November 15 (Wed.), 2017, and its second and following meetings around once a month.

The meetings will be closed to the public to allow members of the study group to exchange their opinions in a frank and free manner. However, the distributed materials and a summary of the minutes of the meetings will be made public after meetings.
 

Release date

November 13, 2017

Division in Charge

Bio-Industry Division, Commerce and Service Industry Policy Group, Commerce and Information Policy Bureau

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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